Answer:
$7,888.55
Explanation:
we can prepare Katie's expected balance on her accounts:
end of year 1 = $500 x (1 + 5%) = $525
end of year 2 = $525 + [$525 x (1 + 4%)] = $1,071
end of year 3 = $525 + [$1,071 x (1 + 4%)] = $1,638.84
end of year 4 = $525 + [$1,638.84 x (1 + 4%)] = $2,229.39
end of year 5 = $525 + [$2,229.39 x (1 + 4%)] = $2,843.57
end of year 6 = $525 + [$2,843.57 x (1 + 4%)] = $3,482.31
end of year 7 = $525 + [$3,482.31 x (1 + 4%)] = $4,146.60
end of year 8 = $525 + [$4,146.60 x (1 + 4%)] = $4,837.47
end of year 9 = $525 + [$4,837.47 x (1 + 4%)] = $5,555.97
end of year 10 = $525 + [$5,555.97 x (1 + 4%)] = $6,303.21
end of year 11 = $525 + [$6,303.21 x (1 + 4%)] = $7,080.33
end of year 12 = $525 + [$7,080.33 x (1 + 4%)] = $7,888.55
